In terms of all the control that you can enjoy contributing your retirement funds to a Self Managed Superannuation Fund (SMSF), it is only right that there are just as many responsibilities for the fund manager to undertake. In this scenario, those responsibilities come in the form of regular audits of your SMSF.
Importance of Auditing your SMSF gives you insight about regular Super Audits for a Self Managed Superannuation and the related benefits both the trustees and the members can gain.
Let’s first get down to what [SMSF] audits mean. An SMSF audit is a detailed investigation of the financial statements of the fund, its compliance with all the regulations, and also the adherence to the Superannuation Industry (Supervision) Act 1993 (SIS Act), which is usually done by an independent auditor to ensure that the SMSF operates within the legislation.
To be Compliant:
Why having in Regular SMSF audit is so importantin do regular SMSF audits? The provide simply answer is if your SMSF is not fully comply with the SIS Act and other relevant laws so the matter may arise the massive the penalties, disqualification of the trustees and even the fund may be loose the tax concessions. By having the regular SMSF Audit the Trustees will always be in the check that is their compliance within the regulations and then will be able to fix the problems before they are become major.
Another way to bulletproof your SMSF is to ensure you are conducting regular and systematic audits. Trustees have a fiduciary duty to manage and invest the fund in the best interests of its members. It is critical that trustees identify and mitigate risks associated with investment, record-keeping and financial transactions. By conducting regular independent audits, trustees can ultimately increase the SMSF’s assets and the retirement savings of members.
Evaluation of investment strategy:
The SMSF audit process provides an opportunity for investment strategies to be reviewed. This will involve whether the structure of the investment portfolio meets the fund’s strategic objectives and is in line with the members risk tolerance with respect to his/her retirement goals and law changes which may alter your fund strategy.
Trustees are being held to a ratio because of these audits, this allows follow investors to be confident in putting there money in the SMSF. This way the trustees need to make sure they are making their best decisions for the investment of the members.
Member Confidence
If a member is confident in the manner in which their member balance is being managed, one could posit that they would be much more prepared to make contributions to the SMSF. For example, if you knew that your $100,000 member balance was being properly managed, the member may be more inclined to contribute surplus cash to the fund, rather than to simply take it home with them.
Security and Safety in Retirement: The ultimate objective of establishing an SMSF is to aid and facilitate a comfortable retirement of the trustees. Regular audits guarantee that the fund is still in a financially sound position in line with the regulations and thus reducing the risk of issues causing hiccups in the retirement plans of the members.
In conclusion.
Regular SMSF audits are a legal requirement to ensure its ongoing compliance. Nevertheless, they also provide numerous safeguards for trustees and members; among them are: compliance assurance, risk mitigation and transparency. Having your fund regularly audited can ensure the members’ retirement savings are safe and give all stakeholders peace of mind. In summary, a well-audited SMSF is a healthy and secure one.